Use of shall in contracts will remain a topic of discussion. Today’s entry is this post on IP Draughts by Mark Anderson. It summarizes the current state of play.
And it mentions that I’m in favor of using shall for contract obligations, and only contract obligations. I actually recommend an even narrower use than that—use shall only to impose an obligation on the subject of the sentence, as in Acme shall purchase the Shares. A contract can, for better or (usually) worse, articulate obligations in other ways.
I explain my position at some length in MSCD, and also in this article. But here’s the gist of it:
- Contracts are clearer if each category of contract language uses a different verb structure. Using shall for obligations imposed on the subject of the sentence gives drafters an extra verb structure to work with.
- Using shall to impose an obligation on the subject of the sentence represents a departure from my mantra that you should use standard English in contracts. But the advantages of this use of shall outweigh the disadvantages, particularly as use of shall is, from the perspective of readers of business contracts, all too standard.
- Courts have long acknowledged that shall serves to impose obligations. Most of the litigation involving shall pertains to statutes, not contracts. And where use of shall can give rise to disputes—if it’s used inappropriately to express a condition—getting rid of shall wouldn’t fix the problem.
- Throwing shall under a bus is a Procrustean solution that addresses the symptom—overuse of shall—but not the problem, which is that most lawyers aren’t attuned to nuances of verb use.
- It’s just as well that I favor disciplined use of shall—that seems more achievable than getting the transactional world to stop using the word entirely.
Mark also mentions the views of Bryan Garner, who recommends getting rid of shall entirely. The most recent statement of Bryan’s views on shall are contained in the third edition of Garner’s Dictionary of Legal Usage, which appeared this year. (See pages 952–55.)
The relevant passage in the third edition is essentially unchanged from that in the second edition. One of the few differences is that Bryan notes in passing that the point of view expressed in MSCD is “unpersuasive.” It’s not my place to suggest that Bryan should gird his loins and enter the marketplace of ideas to duke it out. But for purposes of the marketplace of ideas, Bryan’s one-word dismissal can safely be ignored.
I have my own one-word assessment of Bryan’s treatment of this subject—”unhelpful.”
Bryan seems to favor the “ABC rule,” which has it that must be used to denote all required actions. But for purposes of business contracts, that’s trumped by the following:
The word [must] may strike the wrong tone particularly when both parties to a contract are known quantities, such as two well-known corporations. It seems unlikely that, for example, an American car manufacturer and a Japanese car manufacturer engaging in a joint venture would want the word must to set forth their various responsibilities. Indeed, it seems odd to draft one’s own contractual responsibilities with must: a lawyer for Ford Motor Company is unlikely to write Ford must … Ford must … Ford must …. The word will is probably the best solution here.
I find this assessment problematic in three respects:
- First, why should the word you use to express obligations depend on how well-known the parties are?
- Second, I have yet to encounter a drafter of business contracts who distinguishes between words used to express obligations depending on whether the obligation is imposed on the drafter’s client or the other guy. That perspective is evident in the lease that Bryan discusses immediately after the quoted language, with the landlord’s obligations being expressed by we will and the tenant’s obligations being expressed by you must. That approach may work for consumer contracts, but it has no place in business contracts.
- Third, my biggest problem with Bryan’s assessment is his statement that “will is probably the best solution.” When it comes to analysis of English usage, you have two opposing camps, the describers and the prescribers. (A useful account of this ongoing tussle is Bryan’s essay “Making Peace in the Language Wars,” in Garner’s Modern American Usage.) Given that contracts regulate conduct, and given the unholy mess that is traditional contract drafting, the only sort of guidance that makes sense is reasoned and clear-cut prescription. Bryan’s wishy-washy “is probably” falls well short of that.
While I’m at it, here from the same passage is a problematic extract pertaining to will:
[I]f a future tense really is needed, as to express a future contingency, then will is the word. But this circumstance is not common, since the best drafting should generally be in the present, not the future tense.
Yes, it’s best to use will only with respect to future contingencies, but there’s nothing uncommon about that. Language of policy relating to future contingencies is an utterly routine component of contract language. Here’s one example: Any attempted transfer of Shares of violation of this agreement will be void. Here’s another: This agreement will terminate if the Market Price falls below $1.00. See MSCD 2.161.
The upshot is that I’m at peace with MSCD‘s recommendations regarding shall, will, and must. But I don’t want to overemphasize my differences with Bryan on this subject. For both of us, the main point is that shall is grossly overused.
10 thoughts on “Revisiting Use of “Shall” in Contract Drafting”
Thank you. Quite helpful. I use will (because shall sounds a bit archaic) but I define it as follows: ) “will” expresses an imperative, an obligation, and a requirement.”
Chas: For three reasons, I’m at peace with the fact that I give “shall” a greater role in contracts than it has in everyday usage. First, it’s useful. Second, contract language is limited and stylized, so it’s OK for it to use that one bit of specialized vocabulary. And third, transactional types are addicted to “shall,” so it’s not as if I’m inflicting on them an unknown quantity.
But more to the point, your provision specifying drafting conventions cannot work—as I say in my post, “will” is used in contracts to express futurity, so even if you use it to express obligations, that won’t be its only function. And why the redundancy—“imperative,” “obligation,” AND “requirement”?
Ken – excellent post. At the risk of sounding like an old codger, I find that usage has become less precise over the years, and a disturbingly large number of lawyers these days appear either unfamiliar with basic rules of grammar or too lazy to apply them when drafting documents. I am aware of at least one national law firm that likes to include a definitional provision to the effect that “will” and “shall” mean the same thing, as do “that” and “which”. I trust Koncision will not incorporate this abject surrender to mediocrity.
Andrew: MSCD 14.18 describes as “hopeless” the first provision you mention. And the same goes for the second. It does no one any good to state flat rules that contract language is unlikely to, and even shouldn’t, comply with.
But I’m not sure there’s ever been a golden age of contract drafting. I suspect that it’s always been largely crappy!
Ken, a question. Why do you omit from your statement of position (“[U]se shall only to impose an obligation on the subject of the sentence, as in ‘Acme shall purchase the Shares'”) the other shoe, that the subject of a “shall” sentence should be a party to the contract? BAD: “The [nonparty] Auditors shall issue their report….” GOOD: “The [party] Bank shall cause the Auditors to issue….”
Just found this site a few weeks ago, and it is quite the resource – thank you!
In terms of this 5 year old post (will v. shall), I find this subject fascinating! It’s true that the misuse of these words has resulted in litigation, but I’ve found that the root is typically poor drafting or the drafters’ ignorance. And, I think the original post by Adams fails to consider some core aspects of the reason for the debate. If considered, this might contribute to a more accurate discussion on the reason some (including, presumably, Garner) have their opinion on the use of “shall.”
It’s clear from your initial post that you agree with the strict meaning of the word “shall,” which is, “is required to.” In the case where the obligation is on the subject of the sentence, the use of “shall” works well, as you’ve pointed out (“John shall pay Ray $1”). Clearly, this means “John is required to pay Ray $1.”
In cases of the passive voice – and let’s face it, a vast majority of transactional persons often draft obligations in the passive voice – the obligation ends up on the object (“The price shall escalate”). Said differently, “The price is required to escalate.” Technically, the obligation is on the price, not the parties. If there’s a breach, do we sue the price? Granted, the context will dictate who bears the obligation… hopefully… but this falls into the lack-of-clarity-in-drafting category.
The final case, and the one that makes me (and likely Bryan) cringe is the passive voice negative use (“Neither party shall do X”). Technically, this means (as some courts have held) “Neither party is required to do X,” or said differently, “in any case either party may do X.” Surprise!! Using this phasing is so engrained in the transactional world that attempting to revise the wording is quite difficult at best. And, it always feels a little like playing Russian Roulette when leaving this wording as-is, in that I know what the phrase means (literally) and hope the contract doesn’t end up in litigation over this point. Worse, most drafters are inconsistent in their use of “will,” “shall” and “must.” As you know, even though drafters may use these words interchangeably, judges will, as a default in many jurisdictions, assume the parties purposely used different words in order to express some difference.
Granted, the use of “will” doesn’t necessarily cure all these ills, and I agree that drafting well is the key. But when people don’t know how to use words correctly and lack clarity in drafting (and the last thing the negotiation needs is what everyone else considers meaningless word-smithing), I can imagine why Bryan would advocate for the banning the use of a word that, when used incorrectly, can flip what you thought was a proscriptive obligation on its head. I for one use “shall,” so I’m not advocating for a ban, but because of the rampant misuse and possible ramifications, I can understand why someone might advocate in favor of the ban.
Welcome to the blog! I look forward to digesting your comment. Meanwhile, my most recent analysis is in the following article: https://www.adamsdrafting.com/wp-content/uploads/2014/09/Banishing-Shall-from-Business-Contracts-ACLA.pdf
N.b. That should have said “proscriptive,” not prospective.
Ken – thank you for the welcome!